HOUSE prices rose by nearly 8% during the last 12 months, figures out today showed.

According to Halifax's quarterly house price index, the cost of buying a house rose by 4.1% during the second quarter of the year.

On a year-on-year comparable basis, house prices grew by 7.7%, giving an average price of #90,824.

Halifax group economist Martin Ellis said: "The recent series of mortgage rate cuts, supported by the continuing decline in unemployment and the healthy state of the household sector's finances, has stimulated the renewed buoyancy in house prices."

The index also revealed that Londoners continued to pay more than home owners elsewhere in the UK.

Buyers wishing to settle in the capital should now expect to pay 87% more than elsewhere in the UK, after the city's prices rose by 17% during the last year.

A semi-detached house in London, on average, costs #235,400. An equivalent property in Surrey would be nearly #30,000 cheaper at #207,550.

The Halifax said the buoyant local economy, plus the shortage of suitable properties for sale in London, was behind the discrepancy.

Outside London, the top 20 most expensive places to live was dominated by southern counties such as Surrey, Hampshire and Kent.

Only one northern area - Lothian in Scotland - made it into the top 20.

Some of the cheapest places to live in the UK were Wales, Humberside and Yorkshire, with South Humberside being the cheapest.

There, an average semi-detached house cost #47,900.

It is likely national prices will continue rising during the remainder of the year, said Mr Ellis.

But he added: "Slower economic growth should constrain the market. In addition, high house price to earnings ratios in southern England are likely to limit house price growth in this part of the country."